In an appearance on CNBC’s Squawkbox, Compass real estate CEO and founder Robert Reffkin shared what he felt were the hot property markets in 2021 as the US emerges from the Covid-19 economic slump.
In a segment framing a real estate boom in certain markets as the rise of so-called “Zoom cities”, Mr Reffkin noted that his firm is following this trend by opening up in many mid-sized urban areas in which they were previoulsy not present.
A reference to the remote work conferencing app, Zoom, these are the urban areas to which people have begun moving since the onset of the pandemic, as more and more jobs are no longer tied to a physical workplace.
Mr Reffkin listed Tampa and St Petersburg in Florida; Raleigh and Charlotte in North Carolina; Boulder and Denver in Colorado; and Nashville, Tennessee, as seven cities where he has seen the market heat up.
There are a number of pieces of research looking into why cities such as these are booming over others, each with its own methodology, but broadly they’re the same in terms of covering work opportunities and environment; convenience and connectivity (including a crucially important reliable internet connection); cost of living; and lifestyle amenities.
However, to start, there are the push factors. Those moving to a Zoom city are generally leaving somewhere with expensive real estate and high costs of living to move to an area in which they can get more for their money – no matter whether they are buying or renting. If you are going to be at home for large amounts of time, you will need more space.
Rocket Mortgage notes on its website that many towns and cities seeing an influx of remote workers are often not too far outside of major cities. This allows new residents continued access to big city amenities, such as cultural sites, restaurants, and nightlife, but with lower property costs than within the larger neighbouring urban area.
Other research adds proximity to natural amenities such as national parks, beaches, or mountains as a common theme.
The firm lists common examples of Zoom cities as Centennial, Colorado, outside of Denver; Frisco, Texas, near Dallas; Bellevue, Washington, outside of Seattle; and in California, Carlsbad, near San Diego, and Fremont, in the Bay Area.
Listing the pros and cons of such markets, Rocket Mortgage notes that affordability, a wider variety of housing, extra work-from-home space, and no commute, are all big draws.
However, many of these cities are now experiencing housing shortages, prices are up significantly, some towns are instituting zoning restrictions in the face of the influx of new residents, and there are strains on city services and resources in some cases.
A study by Lawnstarter.com compared 150 cities using 15 key factors including living costs, internet speeds, and remote job opportunities, appears to concur that proximity to a larger city — or connectivity at least — remains important even in the remote working era.
Seven of the cities in the top 10 were in the Greater Dallas/Fort Worth urban area, with Austin, Texas, Yonkers in New York, and Orlando, Florida, rounding out the list.
Texas cities scored so well by earning many of the highest rankings in the work environment and all-important connectivity categories, while also doing well in costs and opportunities. The company promises that being based in Texas did not influence the research.
Outside of the top ten, Jersey City across the Hudson River from Manhattan joined Yonkers as nearby alternatives to living in New York City.
Also scoring well in the Lawnstarter research was the suburb of Overland Park outside Kansas City; Peoria, Arizona near Phoenix; and Port St Lucie on the Florida coast north of Palm Beach and Fort Lauderdale.
Medium-sized cities dominate most lists of popular Zoom cities, with Fayetteville and Raleigh in North Carolina ranking well, alongside Pittsburgh, Pennsylvania; Reno, Nevada; and Tampa, Florida.
Research by home value site Ownerly, looking at data for 304 cities, found that southern Pennsylvania was a “sweet spot” with three of its top 10 cities – Lebanon, York-Hanover, and Lancaster – all in a triangle south and east of state capital Harrisburg.
“These cities all feature a cost of living two to five per cent below the US average, plus abundant free Wi-Fi, a good selection of broadband providers and median home values under $230,000 (versus a national median of $264,200),” observes the Ownerly research.
Clusters of cities also appear to be a feature. In addition to Pennsylvania, cities in North Carolina, Florida, and upstate New York feature on several lists.
California and New England are largely absent from most lists due to their high costs of living – although some towns rank by being relatively cheaper than a neighbouring urban area (as with Yonkers, above).
Ownerly research also notes that east of El Paso, Texas, the south does not make a strong showing. Despite the region’s low cost of living, southern cities can be hampered by comparatively few broadband options and comparatively high crime rates, the research found. Though Texan and Floridian cities do feature in other rankings.
For its research, rental home search platform Apartment List weighted remote-friendliness with 40 per cent of its score to rank 230 cities – the satisfaction and prevalence of remote-friendly jobs. Housing affordability, natural amenities, and urban amenities equally shared the rest of the weighting.
The research also found college towns come high on the list, having plentiful Wi-Fi and broadband options, with good lifestyle amenities, and job markets. Its findings echoed other research with college towns Provo, Utah; Fort Collins, Colorado; Tempe, Arizona; and Ann Arbor, Michigan, taking four of the top ten places.
“College towns are typically rich in urban amenities, offering nightlife, entertainment, and a great food scene,” the site notes. “They also tend to be more affordable, making them a great place to kick off a professional career. Therefore, as college students graduate and land exciting new remote jobs, why would they leave the area?”
Cities with growing tech scenes – specifically Austin, Denver, and Raleigh do well – and while these towns were booming prior to the pandemic, things have not slowed down.
One common feature, as noted by Rocket Mortgage, is that house prices and rents are soaring in many of these locales – timing is everything in real estate.
Boise, Idaho, perhaps not widely known as a hot real estate market, has seen rents rise 31 per cent in a year as more people flock to the city.
The attraction of these towns and the apparent permanence of some level of remote work, seems to show no sign of letting up, though the pressures mentioned earlier may quell some of the demand as inventory gets scarce and prices rise.
Mr Reffkin noted later in his CNBC interview: “We had five buyers on average for every home that had an accepted offer last quarter. That’s not including the incredible pent-up demand from the international buyer.”
On the prospects of his own business, he added: “We are very positive about the rest of this year and beyond.”
